Relationship between Pakistan Mercantile Exchange Commodity Index and KSE-100 Index

Abstract

This research provides evidence and challenges the idea that stocks and commodity exchanges are not correlated. The correlation between stocks and commodities is very important for investors. This study was done to find out the relationship between PMEX Pakistan Mercantile Exchange Commodity index and Karachi Stock Exchange KSE-100 index. This research clearly indicates that both exchanges have strong correlation between them. Unfortunately, the time period is too short to draw a conclusion, but for now financial investors have to keep in mind the sensitivity of commodities with other asset classes like Equity market in Pakistan.